SECOND DIVISION

ROMULO D. SAN JUAN, G.R. No. 174617

Petitioner,
Present:

QUISUMBING, J ., Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR. JJ .

RICARDO L. CASTRO, in his capacity as

City Treasurer of Marikina City, Promulgated:
Respondent.
December 27, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J. :

Romulo D. San Juan (petitioner), registered owner of real properties in Rancho Estate I, Concepcion
II, Marikina City covered by Transfer Certificates of Title Nos. 160435, 236658, and 233877, 1 with the
consent of his wife, conveyed on August 24, 2004, by Deed of Assignment, 2 the properties to the Saints
and Angels Realty Corporation (SARC), then under the process of incorporation, in exchange for 258,434
shares of stock therein with a total par value of P2,584,340. Two hundred thousand (200,000) of the said
shares of stock with a par value of P2,000,000 were placed in San Juans name while the remaining 58,434
shares of stock with a par value of P584,340 were placed in the name of his wife.

On June 24, 2005, the Securities and Exchange Commission approved the Articles of Incorporation
of SARC.3

Respondents representative thereafter went to the Office of the Marikina City Treasurer to pay the
transfer tax based on the consideration stated in the Deed of Assignment. 4 Ricardo L. Castro (respondent),
the City Treasurer, informed him, however, that the tax due is based on the fair market value of the
property.5

4
1 | T a x a ti o n I I – M e l o M . P o n c e d e L e o n
 Petitioner in writing protested the basis of the tax due in reply to which respondent wrote:

In your letter, you asserted that there is no monetary consideration involved in the
afore-mentioned transfer of the properties inasmuch as what you received as transferor
thereof, are shares of stock of said realty company in exchange of the properties transferred.

In reply, we wish to inform you that in cases of transfer of real property not involving
monetary consideration, it is certain that the fair market value or zonal value of the property
is the basis of the tax rate. As provided for under the Local [G]overnment Code, fair market
value is defined as the price at which a property may be sold by a seller who is not compelled
to sell and bought by the buyer who is not compelled to buy. Hence, the preliminary
computation based on the fair market value of the property made by the revenue collector is
correct.6 (Underscoring supplied)

Petitioner thus filed before the Regional Trial Court (RTC) of Marikina City a Petition 7 for mandamus
and damages against respondent in his capacity as Marikina City Treasurer praying that respondent be
compelled to perform a ministerial duty, that is, to accept the payment of transfer tax based on the actual
consideration of the transfer/assignment.8

Citing Section 135 of the Local Government Code which provides:

Sec. 135. Tax on Transfer of Real Property Ownership. (a) The province [ or the city
pursuant to Section 151 of the Local Government Code] may impose a tax on the sale,
donation, barter, or on any other mode of transferring ownership or title of real property at
the rate of not more than fifty percent (50%) of the one percent (1%) of the total
consideration involved in the acquisition of the property or the fair market value in case
the monetary consideration involved in the transfer is not substantial, whichever is higher.
The sale, transfer or other disposition of real property pursuant to R.A. 6657 shall be exempt
from this tax. (Emphasis supplied),

petitioner contended:

It is beyond dispute that under the abovementioned provision of the law, transfer tax
is computed on the total consideration involved. The intention of the law is not to
automatically apply the whichever is higher rule. Clearly, from a reading of the above-quoted
provision, it is only when there is a monetary consideration involved and the monetary

8
2 | T a x a ti o n I I – M e l o M . P o n c e d e L e o n
 consideration is not substantial that the tax rate is based on the higher fair market
value . . . 9 (Emphasis, underscoring, and italics in original)

In his Comment on petitioners petition before the RTC, respondent stated:

xxxx

[M]onetary consideration as used in Section 135 of R.A. 7160 does not only pertain to
the price or money involved but likewise, as in the case of donations or barters, this refers to
the value or monetary equivalent of what is received by the transferor.

In the case at hand, the monetary consideration involved is the par value of shares of
stocks acquired by the petitioner in exchange for his real properties. As admitted by the
petitioner himself, the fair market value of the properties transferred is more than seven
million pesos. It is undeniable therefore that the actual consideration for the assignment in
the amount of two million five hundred eighty four thousand and three hundred forty pesos
(P2,584,340.00) is far less substantial than the aforesaid fair market value. Thus, the City
Treasurer is constrained to assess the transfer tax on the higher base.10

xxxx

The respondent did not refuse to accept payment, it is the petitioner that
refuses to pay the correct amount of transfer tax.
xxxx

The petitioner did not exhaust the available administrative remedies. Under the
Local Government Code, the petitioner should have filed an appeal on the tax assessment
and made a payment under protest pending the resolution thereof. The issues raised in the
case therein, being matters of facts and law, the petitioner should have availed of the
aforesaid relief before resorting to a court action. x x x

xxxx

The subject of this Petition is the performance of a duty which is not

ministerial in character. Assessment of tax liabilities or obligations and the corresponding
duty to collect the same involves a degree of discretion. It is erroneous to assume that the
City Treasurer is powerless to ascertain if the payment of the tax obligation is proper or
correct.

xxxx

10
3 | T a x a ti o n I I – M e l o M . P o n c e d e L e o n
 Mandamus cannot lie to compel the City Treasurer to accept as full compliance a tax
payment which in his reasoning and assessment is deficient and incorrect. 11 (Emphasis in the
original)

Finding for respondent, Branch 272 of the Marikina City RTC dismissed the petition by Decision of
August 22, 2006.

Hence, the present Petition for Review on Certiorari, 12 petitioner faulting the RTC with having
committed serious errors of law in dismissing the petition for mandamus with damages. 13

For mandamus to lie, petitioner must comply with Section 3 of Rule 65 of the Rules of Court which
provides:

SEC. 3. Petition for Mandamus. -- When any tribunal, corporation, board, officer or
person unlawfully neglects the performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station, or unlawfully excludes another from the use
and enjoyment of a right or office to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty and praying
that judgment be rendered commanding the respondent, immediately or at some other time
to be specified by the court, to do the act required to be done to protect the rights of the
petitioner and to pay the damages sustained by the petitioner by reason of the wrongful acts
of the respondent.

x x x x (Underscoring supplied)

In the case at bar, the condition that there is no other plain, speedy and adequate remedy in the
ordinary course of law is absent.

Under Section 195 of the Local Government Code which is quoted immediately below, a taxpayer
who disagrees with a tax assessment made by a local treasurer may file a written protest thereof: 14

SECTION 195. Protest of Assessment. When the local treasurer or his duly authorized
representative finds that the correct taxes, fees, or charges have not been paid, he shall issue
a notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency,
the surcharges, interests and penalties. Within sixty (60) days from the receipt of the notice
of assessment, the taxpayer may file a written protest with the local treasurer contesting the

11

12

13

14
4 | T a x a ti o n I I – M e l o M . P o n c e d e L e o n
 assessment; otherwise, the assessment shall become final and executory. The local treasurer
shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer
finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly
or partially the assessment. However, if the local treasurer finds the assessment to be wholly
or partly correct, he shall deny the protest wholly or partly with notice to the taxpayer. The
taxpayer shall have thirty (30) days from the receipt of the denial of the protest or
from the lapse of the sixty-day (60) period prescribed herein within which to appeal
with the court of competent jurisdiction, otherwise the assessment becomes
conclusive and unappealable. (Emphasis and underscoring supplied)

That petitioner protested in writing against the assessment of tax due and the basis thereof is on
record as in fact it was on that account that respondent sent him the above-quoted July 15, 2005 letter
which operated as a denial of petitioners written protest.

Petitioner should thus have, following the earlier above-quoted Section 195 of the Local Government
Code, either appealed the assessment before the court of competent jurisdiction 15 or paid the tax and then
sought a refund.16

Petitioner did not observe any of these remedies available to him, however. He instead opted to file
a petition for mandamus to compel respondent to accept payment of transfer tax as computed by him.

Mandamus lies only to compel an officer to perform a ministerial duty (one which is so clear and
specific as to leave no room for the exercise of discretion in its performance) but not a discretionary
function (one which by its nature requires the exercise of judgment). 17 Respondents argument that
[m]andamus cannot lie to compel the City Treasurer to accept as full compliance a tax payment which in his
reasoning and assessment is deficient and incorrect is thus persuasive.

WHEREFORE, the petition is DENIED.

Costs against petitioner, Romulo D. San Juan. SO ORDERED.

15

16

17
5 | T a x a ti o n I I – M e l o M . P o n c e d e L e o n